ITAT directed AO to apply GP rate @10% on total sale

1. Aggarwal Extrusions filed its return of income declaring income of Rs.34.7 lakhs.

2. A survey u/s 133A (of Income Tax Act, 1961) was conducted on its business premises, and stock discrepancies were found.

3. AO held that assessee had not disclosed any additional income with regard to discrepancies, and rejected the boks of account.

4. AO noticed that GP rate had declined from 11.86% in pre-survey period to 6.5% in post survey.

5. AO arrived at GP rate @12.2% on the basis of the GP shown in the pre-survey period, after adding the value of stock difference found during the course of survey.

6. AO applied GP rate of 12.2% on total sales and computed GP to be Rs 1.3 crore, and made an addition.

7. CIT(A) confirmed the AO’s order.

On appeal, the ITAT held as under:

8. As stated by us earlier that there is no definite pattern of GP shown by the assessee, however, we see that in the last five years, the GP ranges from 8.01% to 10.46%. In the current year, the assessee has shown GP @ 9.49%.

9. We also observe that applying a rate of 12.2% as done by the Assessing Officer, seems excessive in view of the past history of the assessee.

10. In order to meet the ends of justice, we direct the Assessing Officer to apply the GP rate @ 10% on the total sale made by the assessee during the year.

11. This, in our view, is the most reasonable and appropriate GP rate considering the previous history of the assessee and in the facts and circumstances of the case. 

Case Reference -  M/s Aggarwal Extrusions, Vs. The J.C.I.T.

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH

BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER

AND MS. RANO JAIN, ACCOUNTANT MEMBER

ITA No.547/Chd/2015

(Assessment Year : 2010-11)